Temp staffing jobs hit record as firms dodge ObamaCare costs

Temporary staffing jobs hit a record 2.68 million in May as employers look to lighten the burden of ObamaCare's regulations and fines for failing to provide full-time workers health coverage.

Temp employment grew by 25,600, eclipsing the previous high seen in April 2000. In the past four months, the temp industry has added 99,000 jobs, a spurt that has outpaced the gains in every other sector, except the restaurant industry.

Temp jobs now account for 1.98% of nonfarm payrolls, just below the prior record of 2.03% — but higher than at any time the jobless rate was above 4.1%. That is a noteworthy development, given that temp employment tends to peak with the economic cycle as tight labor markets make temp agencies more indispensable for filling short-term hiring needs.

The boom in temp employment is no surprise because the industry offers ways to minimize ObamaCare's fines for firms with at least 50 full-time-equivalent workers.

One way temp firms can help is by helping employers to stay below that 50-worker threshold and free from ObamaCare's regulations. Firms above that level who don't provide health coverage will face a $2,000 per-worker fine (minus 30 workers), so the 50th employee could mean a $40,000 fine under ObamaCare.

As Keith Waddell, Robert Half International chief financial officer, said on an earnings call earlier this year, "we can legally help them remain under 50, since we are the employer of record for the temporaries we provide to them."

Employers that do offer health coverage also can face fines, if that coverage doesn't meet ObamaCare's affordability and minimum value tests. In that case, employers will face a $3,000 penalty for each full-time worker who taps ObamaCare subsidies.

The temp industry also offers these firms a route to minimize expenses. Consider an employer who needs to hire a full-time worker for a six-month project. If the firm hired this worker directly, it would have to provide health coverage within 90 days of hiring, under ObamaCare rules.

But if an employer hires workers for a six-month stint through a temp agency, the rules are more favorable. Because virtually all temp-agency employment is for less than a year, such workers can still qualify as part-time under ObamaCare, even if they work full-time for up to six months (and perhaps longer).

"Most temporary or contract workers will be considered 'variable' and not eligible for insurance coverage," wrote PACE Staffing Network CEO Jeanne Knutzen in a message to clients last month.

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